News Release | ASA of Ohio | Important Subcontractor Information

 


SubContractor Tip Sheets

Contingency Payments - You haven't been paid for a Job NOW WHAT?
 

Public policy demands that we pay our employees whether we receive payment from the prime contractor or not. Yet pay-if-paid clauses allow prime contractors to pay us only if the owner pays first.
 

No one is expected to work for free - except maybe construction subcontractors. But that is the chance we take when we sign a pay-if-paid contract clause.
 

In most jurisdictions, such a clause may legally prevent us from collecting payment if the owner fails to pay the prime contractor first. These clauses are referred to by a number of names, including "contingent payment," "condition precedent," "pay-if-paid," and "pay-when-and-if-paid." Whatever the name, the purpose is the same - to shift the risk of nonpayment by the owner from the prime contractor to the subcontractor.
 

ASA is working to educate all the members of the construction team about the inequities of pay-if-paid clauses (FAQ). Below are some materials to help subcontractors learn how to address contingent payment.
 
 
ASA Negotiating Tip Sheet: Pay-if-Paid Clause (2013).
Contingent Payment Clauses in the 50 States (2014).
Protecting Against Payment Default (2009).
 
Video on Demand: The Big If in Pay-If-Paid Clauses  $65
 
ASA also has a robust advocacy effort to make pay-if-paid clauses against public policy and thus unenforceable. Because of ASA's work, both the ConsensusDocs' and American Institute of Architects' standard subcontractors assure a subcontractor entitlement to payment except where the contractor does not receive payment due to the fault of the subcontractor.

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